Audit Report

This report reflects the findings of the Office of Inspector General at the time that the audit report was issued. More current information may be available as a result of the resolution of this audit by the Department of Labor program agency and the auditee. For further information concerning the resolution of this report's findings, please contact the program agency.

Report Number:  06-96-002-03-321

Issue Date:   May 22, 1996

The OIG audited the Department's role in the employment-based, permanent labor certification (PLC) and the temporary H-1B Labor Condition Application (LCA) immigration programs. Under these two programs, ETA has responsibility for certifying certain employers' PLC applications and LCAs before aliens can obtain visas to legally work in the U.S. Our audit objective was to determine whether ETA policies and procedures adequately protected U.S. workers' jobs in accordance with the Immigration Act, as amended.

In our opinion, while ETA is doing all it can within its authority, the PLC and LCA programs do not protect U.S. workers' jobs or wages and, therefore, neither program meets its legislative intent. DOL's role amounts to little more than a paper shuffle for the PLC program and a "rubber stamping" for LCA program applications. As a result, annual expenditures of approximately $50 million for DOL's foreign labor certification programs do little to "add value" to the process of protecting American jobs and wages.

The PLC Program Does Not Meet Its Legislative Intent of Excluding Foreign Workers When Qualified, Willing U.S. Workers Are Available

The PLC program is employment-based and is intended to exclude aliens who seek admission to the U.S., or status as an immigrant, for employment purposes when qualified, willing U.S. workers are available for jobs. However, we found that the program does not currently protect U.S. workers' jobs. Instead, the PLC program allows aliens to immigrate, based on their attachment to a specific job, and then shop their services, in competition with equally or more qualified U.S. workers without regard to prevailing wages.

For the 24,150 aliens for whom PLC applications were certified, we determined:

• 99 percent were in the U.S. when the application was filed.
• 74 percent were working for the U.S. employer at the time of application.

Of these, 16 percent were not legally eligible to work for U.S. employers:

• 8 percent had pleasure visas.
• 1 percent had business visas.
• 4 percent were in the U.S. illegally.
• 3 percent had other visas.

• 11 percent never worked for the petitioning employer after adjustment to permanent resident status although the only reason for obtaining the green card was that the employers claimed that they had a job vacancy and that no qualified, willing U.S. workers were available.

As part of the labor certification process, the employer must conduct a test of the labor market to determine that there are no qualified, willing U.S. workers available for employment in a job for which an application has been made. Using two different audit approaches, we determined the PLC labor market test was perfunctory at best.

The LCA Program Is Being Manipulated Beyond Its Intent of Providing Employers the Best and Brightest in the International Labor Market While Protecting the Wage Levels of U.S. Workers

The LCA program is intended to provide U.S. businesses with timely access to the "best and the brightest" in the international labor market to meet urgent, but generally temporary, business needs while protecting U.S. workers' wage levels. We found that the program does not always meet this purpose. Instead, it serves as a probationary try-out employment program for illegal aliens, foreign students, and foreign visitors to determine if they will be sponsored for permanent status.

We determined that:

• 4 percent of the aliens in the LCA program were treated as independent contractors by their LCA employers,

• 6 percent were contracted out, by their LCA employers, to other employers,

• 75 percent worked for employers who did not adequately document that the wage specified on the LCA was the proper wage, and

• 19 percent were paid below the wage specified on the LCA, when we could determine the actual wage paid.

The only protection the LCA program supposedly provides U.S. workers is that the employer is required to pay the alien the prevailing wage for the specialty occupation. Yet, with the increasing use of LCA workers and employers' failure to either document and/or pay the prevailing wage, the prevailing wage may be eroded over time.

Legislative Reforms Needed

In our opinion, the PLC and the LCA programs are easily manipulated and do not protect American workers' jobs and wages as intended. Therefore, we recommended that the Assistant Secretary for Employment and Training work with the Secretary and the Congress to:

• eliminate DOL's PLC and LCA programs as they currently exist;

• if it is decided that the program should be continued, establish a new program that corrects the deficiencies identified; and

• ensure DOL's costs are fully recovered by charging user fees to the employers who benefit from the programs, if DOL has a role in the redesigned program.

[Full Report in PDF]   45 pp.  {213k}

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